Mac Mini 2011 cannot reinstall lion

I have the 2.3 Ghz 2011 Mac mini and I was going to reinstall Lion through recovery as there is no disk or flash media included with the computer. I am able to boot into recovery but when i choose to install lion, I receive a message that it has to check with Apple to confirm availability and errors out saying I need to contact Apple Care.
I called AppleCare and they acknowledged they know the problem is related to serial number issues but can not do anything with out charging a rediculous fee for service. The tech said they have to make changes on their end but cannot move forward with out payment? He also said taking it to the store is not an option as I am out of 90 days for software related issues.
I have found that others that cannot reinstall on MacMini also have the same problem with iLife apps not update correctly through Software update and showing up in App store as purchased but cannot update.
I should note that Lion came preinstalled on the computer, it was not purchased though the App store so I cannot make a booatable USB drive to install from, it has to connect over the internet and for some reason is failing authenication from Apple.
Any suggestions would be appreciated as i have tried formatting main disk and lost recovery HD on main drive. Luckily, I had make an extenal Recovery HD(no .dmg) and can also boot from internet recovery.
Thanks and beware of purchasing computer that offers no physical backup of Operating System!

If on the off chance you hvae another mac or you know someone else who has a mac download this tool and creatse a bootable OS X Lion recovery USB Pen. Then you should be able to recover from it. I have the Same Mac Mini as you, I have a bootable USB Created, I haven't used it but made it on the off chance something happens.
Hope this helps and Good Luck,
Rory
http://support.apple.com/kb/DL1433 <--- Incase the hyperlinked words dont work

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